Electronic Communications Submission 2006 (2)

27 October 2006 – AER SUBMISSION ON THE REVIEW OF THE REGULATORY FRAMEWORK FOR ELECTRONIC COMMUNICATION NETWORKS AND SERVICES

Introduction

The Association of European Radios (AER) is a Europe-wide trade-body representing private and commercial radio broadcasters in France, Germany, Italy, the UK, Greece, Spain, the Netherlands, Denmark, Finland, Sweden, Switzerland and Romania. AER represents the interests of over 4.500 private and commercial radio operators.

Since its creation in 1992, AER has actively contributed to the Commission’s work on electronic communications and services (Telecom Package) and spectrum policy initiatives and thanks the Commission for its invitation to comment on the review of the EU Regulatory Framework for Electronic Communications and Services.

AER welcomes this review taking place in the framework of the i2010 Initiative as an opportunity to remind the European Commission of the central role played by radio broadcasting in Europe and to alert DG Information Society and Media to the adverse effects that some of its policies could have on the future of the radio industry in Europe.

There are currently approximately 10.000 privately and commercially-funded radio stations broadcasting news, music, services and entertainment programmes to over 456 million listeners across the 25 EU Member States. Most are SMEs broadcasting to local and regional communities and offering free-to-air programmes. These are programmes which public service broadcasters, TV or even telecom operators do not provide or provide only against a fee. These radio stations are financed by advertising revenues which are currently their only source of income.

Radio – and indeed commercially funded radio – offers services of general interest and serves the public in particular at local and regional level. AER would like to point out that when all other technology fails, radio still functions (in emergency situations for example).

At the moment, radio faces difficult and sometimes even adverse conditions which include:

the absence in some Member States of adequate regulatory frameworks – and indeed of digital radio strategies – at national level for digital radio;

the swift development of digital technologies which has led to a diversity of sometimes conflicting digital strategies by radio broadcasters;

uncertainty regarding advertising revenues in the long term and thus sufficient means to invest in new technologies;

the privileged position of public service radio broadcasters in terms of access to funds allowing public radio to be present on all analogue and digital platforms if it so wishes;

the privileged position of public service radio broadcasters with regard to access to digital licences;

the privileged position of public service radio broadcasters with regard to access to analogue and digital spectrum;

difficult bottleneck situations when platform owners/gatekeepers decide over spectrum and retransmission of programmes;

finally and most importantly, competition for spectrum between players who are not in a position to compete on equal terms: for example, rich telecom operators and less wealthy commercial radio broadcasters, in particular the small and medium-sized broadcasters representing the vast majority of radio stations across the EU.

AER extensively commented on the Commission’s proposals (AER submission dated November 13th, 2000) and has always supported the liberalisation of the electronic communications sector as a means to achieve the Lisbon Agenda. We also participated in the “Call for Input” in early 2006.

AER regrets, however, that virtually none of the concerns of the radio industry has been taken into account and believes that the discouraging situation faced by much of the private radio broadcasting industry is, in part, a direct result of the Commission’s policies for electronic communications and its intentions regarding spectrum.

Free-to-air radio broadcasting is at risk and this surely cannot be the intention of the European Commission.

We therefore trust that the specificity of radio broadcasting will find its way into the Commission’s review, future proposals and more generally into the i2010 Initiative.

AER Comments

While we are happy to submit our comments, we trust that this will be only part of the dialogue which the radio industry intends to continue developing with DG Information Society and Media to ensure that final proposals are well-balanced, take fair account of the realities of radio broadcasters – and their listeners – and help rather than hinder the development of a vibrant radio industry in Europe with a strong footing in tomorrow’s digital technologies and the expanding Information Society.

Scope and objectives

Whilst the current Regulatory Framework has not been implemented across all Member States, the previous framework is still in the process of being implemented in some EU Member States (ex. Greece and some new EU Member States) thus making it difficult to assess their impact on the radio industry across the EU25.

While the “Telecom Package” has certainly delivered in terms of liberalising the telecom sector, it has so far had little impact on regulatory frameworks for digital radio. Although in some Member States such regulatory frameworks have been implemented (UK, Italy, France) and are setting the stage of the roll-out of digital radio, in most EU Member States, the status quo remains.

AER understands why the Commission wishes to accelerate the transition to an ICT-led economy in the EU but warns that industries such as the radio industry might be unable to compete on equal grounds with telecom operators thus jeopardising the right of citizens to receive “free-to-air” radio services and/or reducing the plurality of such services. The regulatory frameworks under discussion are based on telecom regulation and do not properly weigh the value and importance of the content transmitted through broadcasting networks – in particular for the 456 million listeners across the EU who listen to the radio.

Convergence and technological developments

AER endorses technological neutrality for all electronic media, including radio. Nevertheless radio broadcasters are in the process of making difficult choices for their primary broadcasting technology, based on investment opportunities, available capital, regulatory frameworks, technology most adapted to needs, spectrum availability and pressure from other spectrum users (TV, telecom, etc…).

While presence on multiple digital platforms is comparatively easy for public service radio which has ready access to risk-free investment, this must be checked against the public stations’ public service remit. Commercial radio by and large will be unable to afford similarly wide-ranging investments and the dual model of public and commercial radio broadcasting in Europe will thus be jeopardised.

While radio – contrary to TV – has always been the mobile medium “par excellence”, new technologies now allow all kinds of services – including multimedia and “mobile” radio – to be offered to consumers “on the move” via their mobile telephones, PDAs or laptops. The regulatory frameworks in place favour this and should continue to do so. AER however wishes to remind the Commission that – unlike services bundled and offered by telecom operators or some TV broadcasters to their customers for a payment – commercially funded radio broadcasters by and large will offer their services to their listeners for free. Alongside free-to-air broadcasting, radio broadcasters will have the possibility and need to develop new business models for individual services. A general sector specific regulation for broadcasting is still essential and necessary. Radio broadcasting fulfils not only an economic, but also an essential cultural and social function.

Spectrum Management

AER supports flexible and effective use of spectrum, but asks the Commission to respect the special role of radio broadcasters in terms of their social and cultural components.

Spectrum allocation should remain the responsibility of the Member States following the subsidiarity principle.

AER would like to underline once again the enormous differences which exist – and which must be respected – between spectrum allocated to broadcasting and spectrum allocated to telecommunication.

We believe that, in the digital age, spectrum for radio broadcasting will be less limited but that, given the values and comparative poverty of commercially funded broadcast radio described in preceding paragraphs, urgent speed of development must be matched by careful spectrum allocation to ensure that a reasonable proportion of the available spectrum is reserved for the use of free-to-air, commercially funded radio broadcasters, at a reasonable cost.

Fair and transparent allocation mechanisms are essential – and flexibility in the broadcasting bands is desirable. “Technological neutrality” however cannot be conducive to fair allocation to radio broadcasters when sharing the same bands with other spectrum users such as TV or telecommunications. Nor can it be an obvious choice, technically speaking. Many examples of mutual interference between different broadcasting technologies on the same band are reportedly generated along borders by the coexistence of different radio-communication services (e.g. broadcasting and fixed, broadcasting and aeronautical) and could only become more acute should broadcasting share bands with, for example, telecom operators.

At this stage the most crucial issue for private and commercial radio broadcasters is fair and non-discriminatory access to spectrum for (digital) radio broadcasting in a highly competitive environment where spectrum is likely to become a commodity like any other. Radio broadcasting cannot compete at market level for spectrum with other spectrum users such as telecom operators because of the different kind of services it provides. Telecom operators charge for each connection set-up. Commercial radio broadcasters are mostly free-to-air and revenues are generated by advertising and sponsorship carried alongside editorial content subject to a complex system of audience measurement.

As radio broadcasters, we believe that the content dimension is crucial and that servicebased criteria which guarantee choice and plurality of provision should be favored when awarding radio spectrum rather than purely economic valuation of spectrum such as auctions or spectrum trading in which any party can participate, including those with no wish to use the spectrum for broadcasting.

In AER’s view, a European coordination of Member States’ spectrum policies could be helpful in ensuring that policy-makers and regulators are aware of the value of keeping spectrum available for radio broadcasters and helping ensure equal rights access to spectrum for private and public radio broadcasters. Administrative models have to be kept for broadcasting. However, we don’t consider the creation of a new European agency as necessary: as we said initially, spectrum allocation is a matter of the Member States.

“Article 7” procedure

AER welcomes a simplification of the market review procedure. On the other hand the procedure still has to take into account the specificities of each national market. As mentioned above, the implementation of the Directives and the respective market assessments have not yet been completed in all Member States so that experience is limited.

Must Carry

Radio is increasingly made available on a variety of platforms (cable, satellite, internet, mobile phones) and rules should be adapted accordingly. Must Carry can either be a legal provision for a mandatory transport of private radio programmes or a general possibility for NRA to secure a variety of programmes. Must Carry rules are necessary for securing diversity, especially if vertically integrated platforms are allowed to develop (content and networks offered by the same operator). All radio broadcasters – whether public or private – holding a content licence relevant to a defined geographical area should be able to broadcast their programmes and services via multiplex facilities. The general assumption of the Commission that after digitalisation, more capacity will inevitably become available, is turning out not to be true as some net operators tend to choose a triple play (broadcasting, internet, telephone) model to the disadvantage of private broadcasters.

Standards and interoperability

The Eureka 147 system – DAB developed by a consortium of European operators with EC financial support – was listed in the “Telecom Package’s” lists of standards and is perceived as one of the most appropriate technologies for digital radio. But a great deal more had occurred since the development of Eureka 147.

As mentioned earlier, radio broadcasters are in the process of making difficult choices regarding their “primary digital broadcasting technology”. There will probably be no “universal” standard for digital radio but a variety of digital technologies and platforms – sometimes competing and sometimes complementary – such as DAB/DMB/DxB, DRM, DVB-H, HD Radio/Iboc, etc.

In this context, AER wishes to underline the need for a common European technological platform and a common European receiver market in order to keep implementation and diffusion costs at an acceptable level. The private and commercial radio industry and its 456 million listeners should not be the ones to bear the full burden of digitisation (ie. having to pay for otherwise free-to-air services).

AER believes that interoperability of digital radio equipment should be ensured as should interoperability between analogue FM and digital broadcasting services. Likewise, interoperability between digital radio services and other services – such as those provided by other digital technologies – should be guaranteed. Therefore a set of standards to be used at European level, according to article 17 of the Framework Directive, is an important instrument for the development of the Internal Market.

Finally, while listening to the radio is done in a variety of ways and places (home, car, office, public transportation, etc.) via an increasing variety of mobile and non-mobile devices (stereo system, car radio, mobile phone, PDA, computer, etc…), it is also well-known that consumers replace their radio receivers less frequently than their TVs. In order for consumers to listen to their favourite radio programmes without having to worry about technology, AER recommends that radio receivers are equipped to receive all existing and future digital radio technologies.

Consumer protection, citizen’s interest and users’ rights

It has been questioned whether it is necessary for general interest objectives to extend to transmission networks (as opposed to content already covered by the Regulatory Framework) in a scenario where, for example, mobile reception would be included in digital coverage obligations. It has also been suggested that there is a case for the separate treatment of existing general interest broadcast services and purely commercial content provision and that the latter should have no greater claim to access limited spectrum resources than any other commercial application (mobile telephony or data casting).

Europe enjoys a leading role in the development of digital broadcasting techniques for international, national and local digital radio broadcasting. These standards are particularly well suited to radio broadcasting which is characterized by an essential “content” dimension and a “one-to-many” as opposed to a “one-to-one” capacity which characterizes telecommunications. DAB for example can provide “one-to-many” communications (audio and data) of all kinds, free-to-air, robustly, in the fixed, wireless and mobile environments.

In spite of these possibilities and unlike some television services, commercially-funded radio will, to a very large extent, seek to remain free-to-air whatever additional services it might decide to offer to its listeners. Such services, which could include emergency services, travel, traffic and weather information or even interactive radio, are of general interest and ideally, in our view, should continue to be made available to citizens for no additional cost. For commercial broadcasters, revenues will continue to be generated by a mixture of advertisement and editorial content sold to, and evaluated by advertisers via a complex research process.

The enhancement of transmission quality should be considered as a natural evolution of the radio medium rather than merely as an opportunity for different services which somehow exceed the ‘services of general interest’ concept. It seems to us that there is an assumption that other telecommunication or even broadcasting systems can easily do what radio normally does. We think this is incorrect: radio broadcasters are the only ones to have developed the skills and craft to continue to offer services and independent editorial content which will be popular with their listeners as well as advertisers.

We hope the Commission will foster and favour policies that will protect the continuation of free-to-air radio in all its forms. Not to do so may lead to its demise, the loss of thousands of jobs across the EU, the disappearance of our radio heritage and most importantly a huge loss in pluralism and diversity of content for European citizens.

Notes: Brussels-based AER (the Association of European Radios) represents the interests of 14 national private and commercial radio associations in 11 EU Member States, Switzerland and Romania. The AER web site provides further information at www.aereurope.org